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Bankruptcy can taint your credit report for up to 10 years, but you can boost your score much sooner.
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Boost your credit score after bankruptcy

Filing for bankruptcy is not a decision most people take lightly, especially because it affects access to new credit, home loans and even employment opportunities, not to mention the emotional impact filing for bankruptcy can have.

Nevertheless, more than 1 million consumers filed for bankruptcy during the 12-month period ending Sept. 30, 2008, according to federal court statistics released in December. This compares to 775,344 filings over the same period the year before.

Bankruptcies can remain on your credit report for up to 10 years and can decimate your credit score by hundreds of points. But by adopting these strategies, you could boost your credit score and become creditworthy several years before the bankruptcy drops off your credit report.

7 steps to a higher credit score
Bide your time
Generally, the more time that has elapsed since your bankruptcy discharge and the faster you establish a positive payment history, the quicker your credit score will start inching out of the basement.

The payoff to your credit score can come relatively quickly with the right financial management practices. That's why it's critical to start establishing positive credit lines immediately.

"If you're doing all the right things, like staying current on payment obligations, opening new payment obligations and performing well on them, and keeping your balances low relative to your credit limit, your score can rebound from bankruptcy to a decent level where you can start qualifying for (unsecured) credit in around three years," says Ethan Dornhelm, principal scientist at FICO Scoring Solutions Division.

But Dornhelm cautions that in this credit environment it could take longer than a few years to boost your credit score to acceptable levels if lenders remain skittish and keep raising scoring standards.


-- Posted: Feb. 18, 2009
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